Consumer Purchasing & Protection Chapter 4 10/8/2015 1

What You’ll Learn  When you have completed this chapter, you will be able to:  Determine the factors that influence buying decisions  Explain a research-based approach to buying goods & services  Identify strategies for making wise buying decisions  Identify ways to solve consumer problems  Describe the legal alternatives for consumers 10/8/20152

Consumer Purchasing What influences you to make a purchase? Trade-offs & buying decisions Ex. Buying on credit allows you to obtain the product now…it will be more expensive in the long run due to interest charges Researching Consumer Purchases Four phases of buying 1. Before you shop 2. Weighing alternatives 3. Making the purchase 4. After the purchase 10/8/20153

Influences on Consumer Buying Decisions (Figure 4.1) What are the economic, social, and personal factors that would influence you if you were going to buy a car? Economic FactorsSocial FactorsPersonal Factors PricesLifestyleGender Interest ratesInterestsAge Product qualityHobbiesOccupation Supply & demandFriendsIncome ConvenienceCultureEducation Product safetyAdvertisementsFamily size Brand nameMediaGeographic region Maintenance costsEthnic background WarrantyReligion 10/8/20154

Phase 1: Before you shop  Identifying you needs  Does it have to be name brand or can it be generic?  Gathering information  Becoming aware of the marketplace  Completing these steps will enable you to get what you really want 10/8/20155

Phase 2: Weighing the Alternatives  Every consumer decision may be approached in several ways  Instead of buying an item, what could you do instead?  Identify what is important to you – features, performance, design  Compare prices  Do comparison shopping 10/8/20156

Phase 3: Making the Purchase  Negotiate the price  Decide on credit or cash – consider the costs & benefits of each  Before deciding on credit, evaluate its costs, such as interest rates & fees  Down payment – portion of total cost that must be paid at time of purchase  Know the real price – any extra costs (installation, delivery, etc.) 10/8/20157

Phase 4: After the Purchase  Any other costs or tasks?  Ex. Additional maintenance &ownership costs like insurance on car  Learn how to operate the product correctly in order to avoid major repairs  Learn the policy for returns or replacement of product 10/8/20158

Smart Buying Strategies How can you make an informed purchase decision? Timing purchases – seasonal deals Store selection – Cooperative Brand comparison – Generic vs. Name brand – Impulse buying – purchasing items on the spur of the moment can be more expensive 10/8/20159

Label information research – Labels often include a great deal of advertising – Federal laws also require labels present factual information – Labels on processed foods must have nutritional information – Open dating – helps determine freshness of some foods 10/8/201510

Price comparison  Unit pricing – standard unit of measurement to compare the prices of packages that are different sizes  Rebate – partial refund of the price of a product  Have to submit a form, the original receipt, and the package’s UPC symbol, or bar code 10/8/201511

Warranty evaluation  Warranty – written guarantee from manufacturer that states the conditions under which the product can be returned, replaced, or repaired  Types of warranties:  Implied – unwritten guarantees that cover certain aspects of the product or its use  Express – full or limited warranty will fix or replace product or parts 10/8/201512

Service contract  Separately purchased agreement by the manufacturer or distributor  Cover costs of repairing the item  Sometimes have extended warranties  You have to pay extra for service contract 10/8/201513

Resolving Consumer Complaints (4.2) Sources of consumer complaints Most customer dissatisfaction results from products that are defective or of poor quality Results in unexpected costs, deceptive pricing, and unsatisfactory repair service. 10/8/201514

Fraud  Dishonest business practices that are meant to deceive, trick, or gain an unfair advantage  Types of fraud:  Telephone and mail scams may offer you phony free prizes, travel packages, work-at-home schemes, and investment opportunities  Best way to protect yourself from consumer fraud is to recognize it before you become a victim 10/8/201515

Resolving differences between buyers & sellers – Return to the place of purchase – Contact company headquarters – Consumer agency assistance Government agencies – Dispute resolution Mediation – attempt by a neutral 3 rd party to solve problem…not legally binding Arbitration – conflict is resolve by 3 rd party and is legally binding 10/8/201516

Legal options for consumers  Small claims court – court that deals with legal disputes that involve amounts below a certain limit  Class action suits – legal action on behalf of all people who have suffered same injustice  Other legal alternatives  Legal aid society – network of community law offices that provide free or low-cost legal assistance. Not everyone is eligible for this service…based on income 10/8/201517